On the heels of volatile trading action in markets around the world, the Godfather of newsletter writers, 90-year old Richard Russell, believes the long awaited gold base has completed and his subscribers can expect to see some historic trading in key markets. Below Russell covers everything from God to major markets as only he can.
Russell: “With central banks around the world trying to devalue their currencies, the US dollar stands as the cleanest shirt in the closet of dirty laundry. Some of the new reports emerging about the US economy are less than bullish. This has holders of US dollars thinking about a currency that might be stronger than the dollar. Thus, one hears words like “get out of dollars, get into gold,” and after years of bad-mouthing gold, the yellow metal is coming into acceptance again.
Below, an up to date P&F chart of gold. At 1210 we have a bull signal with an upside target projection at 1340. Subscribers who don’t own any physical gold should now move to make their first purchase. I’ll now stick my neck out and claim that the long awaited gold base is completed.
Gold is holding above 1200 as I write. High volatility in gold has caused traders of paper gold to pull their hair out. Those of us who have held physical gold have had little to worry about.
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It’s late 1957. The bull market had started up in June 1949. Suddenly a recession starts in late 1957. Sentiment among the crowd turns black bearish. The market sinks into a severe correction. I don't believe that the bull market is over. People call me an idiot, but I am convinced that the bull market has a lot further to run. The reason is that the bull market never produced a third speculative phase. I write an article published in Barron’s to the effect that I expect a third highly speculative phase to appear ahead. People remain stubbornly bearish. They tell me I’m out of my mind. But I know that the market normally has a severe correction following the second phase of a bull market and just preceding the third speculative and final phase.
The Dow sinks to 419 in October and then turns up in the face of the severe recession. Investors are actually angry. How can the stock market be rising when there is a recession in progress? The stock market pushes relentlessly higher. My bullish Barron’s article causes a sensation. A little ad that I place in Barron’s brings in 300 subscriptions. Overnight I start up Dow Theory Letters. Within a week I am in business!
Now let’s return to the present. I believe a great speculative third phase lies ahead for this bull market. The coming third phase will see the stock market climb far higher than even the bulls think possible.
The question is: is it too late to enter the stock market? In the third phase of a bull market, usually more money is made than in the first two phases combined. Thus, I foresee the possibility of large gains if a third and final speculative phase is ahead. My advice is that you assume an initial position in DIA or SPY on any weakness.
What will be the leverage that will drive up the stock market in the coming third speculative third phase? The answer is human hysteria and greed. And never before seen, sky-high price-to-earnings ratios.
This piece may sound like a reversal of thinking on my part. But it is based on a weekend of deep thinking and memories of 1957. As for timing, I believe the coming third phase could last until 2016. It will have the effect of placing the United States as the continuing world leader. During the coming third phase, I expect new discoveries and inventions to excite mankind. Two stocks that I own in anticipation of the coming wildly speculative third phase are WR Berkley and Berkshire Hathaway. I continue to like physical gold and silver.
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I’ve been writing Dow Theory Letters since 1958 and as you’ve probably guessed, I am not the same man in my nineties that I was back in 1958 when I was in my thirties. Subscribers have undoubtedly noticed that I write a great deal about spirituality, and that I frequently quote Emmet Fox. As I see him, Fox is a genius mystic, an historian and a great servant to mankind. In my reports, I have always attempted to reveal my innermost thoughts to my subscribers. I started out as agnostic, and to be honest, an atheist. But events during WWII and since have served to change my mind. I write what I’m thinking about and what I’m struggling with. And the majority of my subscribers don’t seem to mind (actually many of them like it).
I often ask myself whether I am doing any good in my stay on this good earth. If I have served to guide some of my subscribers toward the spiritual path, I will consider that my visit to the earth on this round will have been worth it. In closing, I’ll say that the most precious commodity on this earth, the most precious commodity that anyone can have, is peace of mind. The antithesis of peace of mind is fear. Fear is the curse of mankind. Man’s greatest task on earth is to equalize or get rid of fear. The path to getting rid of fear is learning to love yourself.
Words from Emmet Fox’s Sermon on the Mount:
The old saying, “God has a plan for every man, and he has one for you,” is quite correct. God has glorious and wonderful plans for every one of us. He has planned a splendid career, full of interest, life and joy, for each, and if our lives are dull, or restricted, or squalid, that is not his fault, but ours.
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